Building Wealth: April 2009

Just last night (April 1,2009) we came from our neighbor's funeral. It was a sudden death. Ate Chit is like a Auntie to me and my sister. She was fond of us when we're little. Our families we're one of the occupants in the neighborhood so we've been neighbors for ages.

She unexpectedly passed away that even at the last moment she spared her family to be of a bother which her family yearn for a chance that they could have at least tend her to show how much they care.

I spoke to one of the family member and she confessed that she's very regretfull. She's sorry for the chance of hugging her, thanking for the unconditional love to her nieces and nephew and telling " Ate Chit I LOVE YOU."

The irony of life.... Trap in the so called vicious cycle- if I could have said this and done that while I still have the chance. We are all guilty of this. Guilty of the lost time we could have declare and shown our love.

When we still have the free and myriad opportunity we never mind it. Once it slip away as if we would like to trade everything we own just to spin the hand of time backwards thus spend the most of it.

When our loved ones are just breath away we seem not to care. We take everything for granted. Allowing each day passes just like that. Thinking the people whom we love are merely around the corner and they are always there the moment we need them. No need to say thank you and I love you. No hugs and kisses because we are too lax assuming we have all the time of this world. We are too proud assuming each tick of the clock is within our control.

We are consumed by trivialities of everyday life that's why we mislook our families, friends and those people close to us which exactly within our reach.

TIME is our precious and most valuable wealth, yet the fact is we constantly take it for granted. Every moment we took for granted is what chance of a lifetime we wasted. Though how much you're sorry of the lost time and how much you cry. Sorry too because it won't come back anymore.

The tick of the clock won't wait us it will go on and on forever. Time could be your ally or enemy it's up to you how you spend the most of it.

How we make use of our time will either make us rich to enjoy with our family.

Or make us poor whick keep us work and work until you're family is much of a stranger to you.

So, that night I hug my mother. I realize to show my love and gratitude before it's too late.

Market Update

Posted by Rose Ann Labels: Equities, Fixed-Income, RSA, RSA QUARTERLY MARKET UPDATE

RSA QUARTERLY MARKET UPDATE:

The general outlook on the global economy is weaker. Both the IMF & World Bank expect that in the first half of 2009, global economic slowdown will deepen. It might take time to break the negative feedback loop. Yet, as economists always say, there is no crisis that was not followed through by a recovery. And so, by year 2010 global financial and economic conditions are expected to rebound. This is due to many stimulus factors. One of which is that there is going to be stronger international policy measures that will facilitate faster restoration of market confidence, however world GDP may still remain below the 4% 10-year average annual growth in the next few years. Many analysts say, despite crisis, Philippine economy will to continue to grow however at a slower pace. Factors that will support domestic growth would be, slower inflation, OFW remittances, and fiscal spending.

Our 6-month outlook is that interest rates may continue to decline as inflation drops and Monetary Board maintains its policy easing stance. On the equities side, the catalysts for recovery of the PSEi would be oversold valuations (near historic lows, that would be attractive to investors), sustained foreign investor buying interest, however recovery may be stalled due to more negative news from the US and Europe.

RSA’s recommended investment strategy:

Fixed-Income – gradually make additional investments to bond funds and allocate at least 10% to USD placements as Peso is seen to weaken in the next few months (ideal to put these in Dollar Bond Funds)

Equities – for those who have direct investments in the stock market, maintain bias towards defensive names and high dividend-paying stocks i.e. telcos and utilities, maintain an active trading portfolio (liquidity/cash is king) to take advantage of price swings; for equity mutual fund investors, maintain peso cost averaging strategy. That is a personal wealth-building strategy that involves investing a fixed-amount of money (does not have to be big amounts) for as long as it is at regular intervals (monthly/quarterly) over a long period (5-10 years-positioned for retirement). A methodology wherein you buy fewer shares when prices are high and buy more shares when prices are low. This ultimately reduces volatility risks and allows you to participate in the potential share value returns of fast growing and dynamic corporations. In this connection we would like to re-introduce to you our:

“Hassle-free Investment Program (HIP)”.

This facility will allow you to submit post-dated checks so you can be assured of automatic regular savings no matter what. You may choose to invest in any of the mutual fund products we advice our clients to invest in. The program includes automatic text or email message reminders to prompt you whenever a check falls due, so the issue of unfunded checks will never be a problem. With this facility, you need not go directly to mutual fund head offices or contact agents every time to submit investments. You may choose from bi-monthly, monthly or quarterly post-dated checks monitoring. What is best is, there are no enrollment fees! For clients located within Metro Manila, investment pick-ups will even be free of charge! Imagine that for as low as Php1,000.00*, you may already be assured of regular savings in high-yielding and actively managed funds even as they are in the convenience of your own home or office.
The key is to take the emotions out of investments. Your main task is to set money aside for your future, not to manage whether it is a “good time” for any instrument or investment vehicle. While the market can still stay low for some months, it accords you the opportunity to take a position at the best possible time.

How Much SAVING do you need for your RETIREMENT?

Posted by Rose Ann Labels: Financial Literacy Education, Government securities, Kaiser, Mutual fund, Treasury Bills, Treasury Notes

" Vision without action is a dream.
Action without vision is a nightmare."

When a person will decide of starting to save. He might ask, How much should I save monthly? How much should an enough savings for my retirement?

How much should an enough savings for my retirement?

Well, there is a formula for that:
Annual Income X 10 = Total Amount of Saving

Example: Let's sayyou have monthly income of Php. 15,000
15,000 x 12 (months) = 180,000 Annual Income
180,000 x 10 = Php. 1,800,000.00

Php.1,800,000 / 1.8 Million is the total amount you must have the moment you retire and you must also invest it that earns 10% rate of return annually.

Why is that so?

1. When you invest the 1.8M in the 10% rate of return investment it will give you 180,000 annually.

Php. 1,800,000 x 10% = 180,000

2. You divide the 180,000 into 12 (months)

Php. 180,000
/ 12
________
15,000

Isn't is the 15,000 is your monthly salary when you're still working? That is what you call LOI or Living in Interest, by the mere interest of your 1.8M that you invest you can support your day to day expenses without asking to your children or bothering relatives or other poeple.

REMEMBER: Be careful of your Php. 1.8M because your supposedly retirement fund will become your own nightmare too, once you put that retirement savings of yours in an illegal investmnet or fly by night business that guarantees you easy and specific high rate of return. There is no such thing as easy and specific high rate of return because every investment and business involves risk. but in the long run ( as in long term of 5years - 10 years) your money will surely grow. And you can't risk your retirement fund that far, maybe your present condition might not handle that risk or retrieve your money in case it's lost.

BE AWARE: too of other people who would like to borrow your money and will promise to pay you. Other people includes your close relatives, even your beloved children. Money loan to other people is very very risky and most of the time no money back guarantee. For Christ's sake it is your retirement fund! It includes your children because by that time you might have gave them their education and having their own job. You've done your responsibility to give them education, so it's their responsibility to save for their own. You can't completely expect your children for your retirement, by that time they also have expenses raising their own family.

How much should my monthly savings?

1. In case your 30 y.o. right now and let's say your retirement age is 60 y.o., so you have 30 years of saving.
60 y.o. = retirement age
- 30 y.o. = age right now
_________
30 = years of saving
( 30 years x 12 mths = 360)

2. From the above example, Php 1.8M
1,800,000
/ 360
__________
5,000 = amount you should save monthly..

So, you must set aside Php. 5,000 each month of your salary for 30 years. 30 years is quite long, yet through investment facility (like Kaiser International) your saving period is shortened ( 5 years ) then let the interest of your money compound until its maturity.

The most secure and safest investment for retirement is Treasury Bills/Notes or Bond Fund. Goverment Securities/Bond fund is a fixed income investment. If you'd save as your retirement fund you may choose to put it in Mutual fund invested in Goverment Securities which is the Bond Fund for as low as Php. 5,000 of initial investment and Php. 1,000 as additional for subsequent investment.